Air India seeks Rs 1,100 crore more from government to implement VRS

NEW DELHI: In a bid to rationalise surplus manpower, Air India has asked the government for an additional Rs 1,100 crore to implement the voluntary retirement scheme (VRS) that is aimed at reducing headcount by 5,000, which many believe is an unrealistic number.

The airline has sought this amount in addition to the Rs 10,600 crore that it is supposed to get this year. A part of this amount will come from the government as budgetary support ( Rs 4,000 crore), while the other ( Rs 6,600 crore) as a portion of a bailout package for the financially struggling airline. "We have asked the ministry of civil aviation for Rs 1,100 crore to implement VRS in Air India and they in turn will talk to finance ministry about it. The amount is needed so that we can make the compensation package attractive in order to bring down staff strength by 5,000," a senior AI executive told ET. The official, however, admitted that this was an "over ambitious number" and that there is a thought within the airline about lowering the VRS target of 5,000 employees.

The VRS is targeted at AI employees who have either completed 15 years of service or are 40 years of age. They would be offered compensation equivalent to the salary for 35 days for each completed year of service and compensation equivalent to the salary for 25 days for every year of service remaining. The airline, which has employee strength of 27,000, seeks to lower its excess aircraft to manpower ratio of about 1: 280, as opposed to industry standards of 1:110-1:150 with VRS. The VRS option would be offered to cabin crew, administrative and clerical staff so as to reduce the age profile of the employees and the corresponding salary-level. The decision to offer VRS to employees has been taken in view of the acceptance of the report submitted by the Justice Dharmadhikari Committee, formed last year in order to rationalise the wages of erstwhile Air India and erstwhile Indian Airline employees in the merged entity Air India Ltd.